Constellation Brands CEO plays down concerns about higher tariffs

In an interview Friday with CNBC’s Jim Cramer, Constellation Brands CEO Bill Newlands brushed off concerns about the possibility of higher tariffs, which former President Donald Trump has pledged to implement if elected.

“First of all, assuming there was a Trump administration, we’re already four years into the Trump administration, and our business has grown by double digits in that time window,” Newlands said. “Two, we have a fair amount of our inputs coming from the United States and then being made into beer in Mexico. I doubt very much that there would really be any perspective on tariffs: How are you hurting the American farmer?”

Constellation Brands is known for a variety of popular beer brands imported from Mexico, including Modelo, Corona and Pacifico. It also has a wine and spirits business that includes SVEDKA vodka. Trump has threatened to impose blanket tariffs of up to 20 percent on imported goods from all countries. His previous administration raised tariffs on Chinese goods, sparking a years-long trade war with the country that has disrupted global trade and cost Americans billions.

Newlands emphasized that the way the company brews its Mexican beers will not change.

“These are authentic Mexican beers,” he said. “Guess what? You have to make them in Mexico.”

He also discussed his recent meeting with Mexico’s new president Claudia Sheinbaum, the country’s first female leader, saying the focus was on “shared prosperity.” Newlands said the company has a good relationship with the Mexican government at the federal and local levels, adding that Constellation Brands is set to open a new brewery in Veracruz.

Constellation Brands reported a mixed quarter on Thursday, posting a decline in earnings but a slight loss in revenue. The company was successful with its beer brands, but the wine and spirits segment continued to weigh on business. Newlands said Constellation Brands is in the midst of improving its wine and spirits and is starting to see some results.

“We’ve readjusted a lot of our marketing spend, we’ve done more tactical spend against some of those critical brands like The Prisoner and Kim Crawford and, and Meiomi, and it’s starting to have some success,” he said. “We’ve seen those businesses start to transform.”

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Disclaimer CNBC Investing Club Charitable Trust owns shares of Constellation Brands.